US markets were neutral on Wednesday as traders processed the prospect of an early rate decrease by the Federal Reserve, which surprised many. Additionally, new statistics indicated that the US economy expanded more quickly than previously stated in the third quarter.
The best performer was the Dow Jones Industrial Average (DJI), which just about finished above the flat line. The tech-heavy Nasdaq Composite (IXIC) and the benchmark S&P 500 (GSPC) both had 0.1% declines.
As Fed Governor Christopher Waller stated there was “no reason” to insist rates stay “really high” if inflation keeps down steadily, expectations for a policy change rose.
Fed Governor Michelle Bowman held a different view, but Waller’s cautious remarks were mirrored by other officials. Chicago Fed President Austan Goolsbee expressed reservations about maintaining rates “too high for too long.”
See more about the implications of the Fed’s rate-hike delay on credit cards, loans, bank accounts, and CDs.
Notable investor Bill Ackman is one of many who is now placing bets that the Fed will begin reducing interest rates sooner than anticipated; he suggests the action may occur as early as the first quarter.
The 10-year Treasury yield (^TNX), which swings inversely to prices, dropped around 6 basis points to roughly 4.27%, its lowest since September, as bonds continued to rise on dovish remarks.
Wednesday’s stock market performance was uneven as traders processed the prospect of an early rate decrease by the Federal Reserve and fresh information revealed that the US economy expanded faster in the third quarter than previously thought.
The best performer was the Dow Jones Industrial Average (DJI), which just about finished above the flat line. The tech-heavy Nasdaq Composite (IXIC) and the benchmark S&P 500 (GSPC) both had 0.1% declines.
Real estate (XLRE) and financials (XLF), two industries that are sensitive to interest rates, led the gains on Wednesday, ending the day up around 0.7% each.
The stock market’s most speculative segments are operating once again.
Due to investor concerns over rising interest rates, many segments of the market that had underperformed for the most of the previous year surged upward through November.
With a rise of more than 2% on Wednesday, the S&P regional bank index (KRE) is up more than 16% so far this month. The flagship Ark Innovation ETF (ARKK) of Cathie Wood started the month up slightly more than 10% year over year. As of 2023, it has increased by more than 50%. The popular meme stock GameStop surged more than 20% on Wednesday alone, while the wide Roundhill Meme ETF (MEME) was up 24% in November. Meme stocks are also surging.
Traders have concluded that cash is garbage in comparison to rapid returns in a wide range of risky assets, despite the fact that it is still yielding close to 5%.” Steve Sosnick, chief strategist at Interactive Brokers, stated in a research report on Wednesday.
Thus, Sosnick continues, “expectation that rates will be coming down, and that is indeed a solid reason for a rise in risk assets.” This is the core of what he called a fear of missing out, or “FOMO” rally.
However, this does not negate the dangers associated with the prevailing narrative in the market.
“My concern is that stock traders have become more enamoured about the prospect of cuts without fully considering the why,” Sosnick stated. “Should a gentle landing occur,
More and more investors are placing bets that the Federal Reserve would lower interest rates earlier than many initially anticipated.
Markets are already factoring in a 78% possibility of a rate reduction by the conclusion of the Fed’s May gathering. According to the CME FedWatch Tool, just one month prior, markets had priced in just a 41% possibility of a cut over the same time frame.
The current state of the stock market also reflects that. Financials (XLF) and Real Estate (XLRE), two interest rate-sensitive industries, are leading the benchmark S&P 500 (~GSPC).
The “Grand Theft Auto” trilogy is among Take-Two Interactive’s (TTWO) most well-known video games. Netflix (NFLX) revealed on Wednesday that it intends to sell it in an effort to further its video gaming goals.
On December 14, Netflix customers will be able to access “Grand Theft Auto: The Trilogy – The Definitive Edition” on the App Store, Google Play, and Netflix mobile app. Fans may sign up in advance starting on Wednesday.
The trilogy brings additional mobile games to Netflix’s expanding library, which already has over 80. additional are on the way. On the announcement, Netflix’s stock remained unchanged.
During Netflix’s earnings call last month, co-CEO Greg Peters stated, “Games is a huge entertainment opportunity.” We’re talking about consumer spending on games outside of China and outside of the $140 billion mark.
Among the most recognisable game franchises is the “Grand Theft Auto” series. According to publisher Take-Two Interactive, as of the company’s most recent earnings report, the franchise—which includes “Grand Theft Auto III,” “Grand Theft Auto: Vice City,” “Grand Theft Auto: San Andreas,” “Grand Theft Auto IV,” and “Grand Theft Auto V”—has sold more than 410 million units.
“Grand Theft Auto V,” the most recent game, became the fastest retail property to achieve $1 billion in sales. An spinoff of “Grand Theft Auto V,” “Grand Theft Auto Online,” continues to bring in millions of dollars for the publisher.
As Take-Two gets ready to unveil the first trailer for the much awaited “Grand Theft Auto VI” in December, they have made this statement.